General Motors will cut 15 percent of its salaried workforce and stop production in several North American plants to reduce costs, the carmaker announced on Monday.
“The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future,” CEO Mary Barra said in a statement. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”
The move comes as GM plans to double the resources allocated to electric and autonomous vehicles in the next two years. The Detroit-based company said it expects more than 75 percent of its total sales in the next decade to come from five vehicle types and, as a result, will stop assembly in plants in Ontario, Canada; Detroit, Mich.; and Warren, Ohio.
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Two propulsion factories will also be closed, and GM plans to stop building its semi-electric Volt, compact Cruze, and full-size Chevrolet Impala in North America in 2019.
“With changing customer preferences in the U.S. and in response to market-related volume declines in cars, future products will be allocated to fewer plants next year,” GM said.
Sen. Rob Portman, R-Ohio, said he was “deeply frustrated” by the company’s decision to shutter the Lordstown plant in Warren.
“For decades, workers in the Mahoning Valley have made a commitment to GM, and today GM let Northeast Ohio down,” he said in a statement. “During today’s conversation, I pressed GM again to provide new opportunities to the Lordstown workers and take advantage of the skilled workforce there.”
Portman urged Barra to “reallocate some of the production and employees” to the Toledo, Ohio, plant.
The carmaker also plans to trim its workforce by more than 8,000, including a 25 percent reduction at the executive level to “streamline decision making.”
Rep. Tim Ryan, D-Ohio, used the announcement to bash the GOP-led tax cuts signed into law earlier this year that lowered the corporate rate permanently to 21 percent. In a statement, he said President Trump “promised us that his massive corporate tax cut would lead to dramatic reinvestments in our communities.”
“That clearly is not happening,” Ryan said. “What we’ve gotten instead are broken promises and petty tweets. Corporations like General Motors and the president himself are the only ones benefiting from this economy — an economy rigged against workers who are playing by the rules but still not getting ahead.”
GM in July lowered its full-year earnings outlook after Trump’s double-digit tariffs on steel and aluminum imports drove up production costs. Revenue in the three months through September rose 6.4 percent to $35.8 billion, while profits jumped to $2.5 billion.
The company in October pressured the Trump administration to require auto manufacturers to annually bolster their production of battery-powered cars, a move similar to an existing program in California that the White House opposes.
GM’s stock rose 5.3 percent to $37.85 in New York trading.
